The Maverick Protocol (MAV) shows Mr. Market thinks decentralized exchanges (DEXs) can still make money. For example, the Maverick Protocol was CoinMarketCap’s seventh most trending cryptocurrency on 4 July 2023.
They call the Maverick Protocol “the AMM for all market conditions.” To explain, an Automated Market Maker (AMM) is the underlying protocol that powers a decentralized exchange. An AMM pays people who provide liquidity to a DEX a share of transaction fees. Additionally, AMMs reward liquidity providers with free tokens.
They claim, Maverick Protocol’s AMM can provide liquidity that sticks with an asset regardless of price. For example, Maverick’s Mode Right feature follows prices in a liquidity pool as they move to the right on a liquidity graph. Theoretically, allows users to swap assets for the asset on the right of a pair if it goes up. For example, if Ethereum (ETH) goes up in a USDC-ETH pair you can swap USD Coin (USDC) for Ethereum.
What is the Maverick Protocol (MAV)?
Essentially, they intend the Maverick Protocol as an infrastructure for decentralized finance. They hope Maverick Protocol AMMs can provide liquidity markets for traders, liquidity providers, decentralized autonomous organization (DAO) treasuries, and blockchain developers.
Maverick Protocol AMM allows liquidity providers to follow the price of an asset in a single direction. Hopefully, this can allow liquidity providers to bet on a token’s price trajectory.
They call Maverick a Dynamic Distribution AMM. A Dynamic Distribution AMM automates liquidity strategies eliminating the require daily maintenance and the use of metaprotocols.
How Maverick Provides Liquidity
Hence, Mode Right automates a strategy to provide liquidity. Similarly, Mode Left follows prices in the pool if the left member of a pair moves up. If USDC goes up and ETH goes down. Mode Left lets users add liquidity to USDC.
Hence, the Maverick Protocol tries to track prices and automatically adjust liquidity to match the movements.
In contrast, Mode Both follows prices whether they move left or right. Hence, Mode Both can adjust liquidity to match the price of either token in a pair. Thus, Mode Both can move liquidity with prices and the market. The hope is that the Maverick AMM will always be able to provide liquidity for swaps.
Maverick Protocol makes money because it collects fees whenever prices move through a bin.
Meanwhile, Mode Static lets users add liquidity without using Maverick’s liquidity shifting AMMs. Hence, an investor can add liquidity when she has extra money available.
Users can use Mode Static to support pools prices and spreads, distribute liquidity evenly across several bins, or put all the new liquidity in a single bin. For example, if Ethereum prices are going up, the user can put all the liquidity in a USDT-ETH bin.
One advantage to Maverick is that allows liquidity providers to pick the range over which it distributes their liquidity.
The Maverick dApp
Users connect to the Maverick Protocol through the Maverick dApp (Decentralized APP) on Ethereum and zkSync Era. The dApp lets users connect wallets to the Maverick AMM to trade and provide liquidity.
The Maverick lets users execute swaps, add liquidity to Maverick AMM pools, and build a portfolio of liquidity.
The ultimate hope for Maverick is to build the most liquid markets for DeFi. This means providing speculators and traders as much cash as possible to support transaction. In particular, they hope to reduce costs and speed up trading with increased capital efficiency.
Maverick’s builders hope to make the AMM more efficient by deploying liquidity in a more flexible and strategic manner. For example, to avoid concentrating liquidity and to move liquidity where it can make the most money.
Hopefully, liquidity will be able to able to follow price moves with Mode Left, Mode Right, and Mode Both. Ideally, capital efficiency can reduce gas fees. Gas fees are charges to use Virtual Machines. Virtual Machines such as the Ethereum Virtual Machine (EVM) are digital computers that run blockchains.
Gas fees are the money they charge for access to a virtual machine. Thus, you need to pay gas fees to access Ethereum aps such as Tether (USDT).
Capital Efficiency measures the volume of liquidity an amount of capital generates by price moves. The level of Capital Efficiency determines how much money an AMM can generate by charging fees. The more capital efficiency the more an AMM can make.
What Value Does the Maverick Protocol (MAV) offer?
Mr. Market thinks the Maverick Protocol (MAV) offers some value. For example, CoinMarketCap gave Maverick a $103.77 million Market Capitalization and a 41.32₵ Coin Price on 6 July 2023.
Similarly, the Maverick Protocol had an $26.71 million 24-Hour Market Volume, and a Fully Diluted Market Cap of $830.575 million on 6 July 2023. They base those numbers on a Circulating Supply of 250 million MAV and a Total Supply of two billion MAV. The Maverick Protocol was the 251st largest cryptocurrency by Market Cap and the 248th largest token by Market Volume on 6 July 2023.
Popular Maverick Protocol market pairs include MAV/USDT on Binance which had a $19.347 million 24-Hour Market Volume on 6 July 2023. In contrast, MAV/USD had a $90,694 24-Hour Market Volume and MAV/BTC had a $564,225 million 24-Hour Market Volume on 6 July 2023. Meanwhile, MAV/ETH on Uniswap had an $16,706 24-Hour Market Volume on 6 July 2023.
In conclusion, I think the Maverick Protocol is an interesting decentralized finance (DeFi) solution. However, I cannot see how Maverick is better than other market makers such as Uniswap (UNI).
I think Maverick’s principal value is the ability to make liquidity markets more flexibility. If these claims are true, Maverick could make money. Moreover, I think Maverick could become an acquisition for an investment bank or tech company.
Speculators seeking a new liquidity protocol need to investigate the Maverick Protocol (MAV). This automatic market maker could make money by building new liquidity markets.
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